Bombay High Court
Gajanan Daulatrao Patil And ... vs State Of Mah.Thru.Spl.Land ... on 21 August, 2017
Bench: V.K. Jadhav
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
FIRST APPEAL NO. 601 OF 1997
WITH
CIVIL APPLICATION NO. 1034 OF 2014
1. The State of Maharashtra,
(through District Collector,
Aurangabad).
2. Special Land Acquisition Officer
Aurangabad ...Appellants
versus
1. Gajanan s/o Daulatrao Patil,
Age major, Occ. Agricultural
R/o. 15, L.I.C. Colony, Jalgaon
Tq. and District Jalgaon
2. Sajan s/o Daulatrao Patil,
Age 46 years, Occ. And
R/o. As above
3. Yadavrao s/o Daulatrao Patil
Age 43 years, Occ. And R/o.
As above
All partners of M/s. Patil
Brothers and Co. Khandsari
Sugar Mills, Mhasekota,
Tq. Soyegaon, District Aurangabad ...Respondents
.....
Mr. A.M. Phule, A.G.P. for the appellants
Mr. A.B. Kale, advocate for the respondents
.....
WITH
CROSS OBJECTION ST. NO. 22145 OF 1997
IN
FIRST APPEAL NO. 601 OF 1997
::: Uploaded on - 01/09/2017 ::: Downloaded on - 02/09/2017 00:49:02 :::
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1. Gajanan s/o Daulatrao Patil,
Age 56 years, Occ. Agriculture
2. Yadavrao s/o Daulatrao Patil
Age 54 years, Occ. Agriculture
3. Sajan s/o Daulatrao Patil,
Age 56 years, Agriculture
All R/o. B-2, Datta Colony,
Near Railway Gate Jalgaon
All partners of M/s. Patil
Brothers and Co. Khandsari
Sugar Mill, Mhasekota, Ori. Claimants
Tq. Soyegaon, District Aurangabad (Respondents in F.A.)
versus
The State of Maharashtra
Through Special Land Acquisition
Officer, Aurangabad
(Copy to be served through the
Government Pleader, High Court
of Judicature at Bombay, ...Respondent
bench at Aurangabad) (Appellant in F.A.)
.....
Mr. A.B. Kale, advocate for the applicants-claimants
Mr. A.M. Phule, A.G.P. for respondent State.
.....
CORAM : V. K. JADHAV, J.
Date of Reserving
the Judgment: 29.06.2017
Date of pronouncing
the Judgment: 21.08.2017
JUDGMENT:-
1. Being aggrieved by the judgment and award dated
24.04.1996, passed by the learned Civil Judge, Senior Division,
Aurangabad, in L.A.R. No.229 of 1994, the original respondent State
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has preferred first appeal No. 601 of 1997 and the claimants have
preferred cross objection (St.) No. 22145 of 1997.
2. Brief facts giving rise to the present appeal and cross
objection, are as follows:-
a) The land Gat No. 85, admeasuring 6 acres, situated at
Mhasekota in Soygaon Tahsil of Aurangabad district, owned by the
claimants came to be acquired by the Government for construction of
Hiwra medium project. The land Gat No. 85 admeasuring 2 H 40 R
came to be acquired including 0.16 Hectare Potkharaba land. Out of
this area, land admeasuring 0.80 Hectare has been converted into
non agriculture (N.A.) purpose for installation of Khandsari factory.
Rest of the area admeasuring 1.44 hectare is left for cultivation.
Though the claimants had asked for N.A. permission for the land
admeasuring 1.44 Hectare out of the land Gat No.85, the same was
not granted by the concerned authority. The S.L.A.O. on 29.3.1982
has published the notification under Section 4 of the Land Acquisition
Act and on 1.9.1986 awarded the compensation for the acquired land
admeasuring 0.80 R, since converted into the non agriculture land, at
the rate of Rs.2.00 per sq. meter i.e. Rs.20,000/- per hectare. The
S.L.A.O. has awarded the compensation to the agricultural land
admeasuring 1.44 R at the rate of Rs.9500/- per hectare. So far as
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Potkharaba land, which is 0.16 hectare is concerned, the S.L.A.O.
has awarded the compensation at the rate of Rs.200/- per hectare.
The S.L.A.O. has awarded total compensation at Rs.29,712/- as the
costs of the land, as detailed above. Apart from the costs of the land,
the S.L.A.O. has also fixed the valuation of structure under three
heads i.e. (I) civil part Rs.3,67,100, (ii) Electrical installation (now to
be demolished) Rs.1,06,000/- and (ii) Mechanical machinery
(dismantling and transportation) Rs.1,05,000/-, total Rs.5,78,100/-.
b) Being dissatisfied with the inadequate compensation awarded
by the S.L.A.O., the claimants had preferred land acquisition
reference for compensation of land as well as structure of Khandsari
project at the enhanced rate. It has been contended in the claim
petition that the award passed by the S.L.A.O. was inadequate and
compensation awarded was too low and it does not reflect true
market value. It has been contended that the acquired land was
surrounded by the villages, tar roads, metal roads and location was
growing fast, as a center of business, education, industries, cultural
activities. It has also been contended that the acquired land is
situated at a distance of 2 kilometers from Pachora and development
plan for industries also came to be sanctioned. The acquired land
was well levelled, well drained and well shaped too. Initially, it was
barren land, however, the claimants had invested huge amount to
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make entire land fertile and useful. Further, the claimants had
started Khandsari sugar mills by making necessary level by incurring
huge expenses thereon. The claimants also incurred huge expenses
for installing water and electricity connections. The claimants thus
claimed market value of the land at the enhanced rate of Rs.150/-
per sq. meter. In addition to this, the claimants claimed the
compensation towards civil structure, foundation of factory, electrical
and mechanical installations. It has also been contended in the claim
petition that the claimants incurred huge loss due to closure of their
Khandsari unit, however, the S.L.A.O,. has not considered the loss
sustained by the claimants to the tune of Rs.5,00,000/- per year
since 1981. It has also been contended that the claimants were not
allowed to shift the machinery and as such incurred huge loss.
However, the S.L.A.O. has not awarded any compensation under all
these heads.
c) Original respondent State has strongly resisted the claim
petition by filing written statement. It has been contended that the
S.L.A.O. after considering entire aspects, awarded just and
reasonable compensation. The S.L.A.O. has collected relevant
evidence and rightly carried out valuation of the acquired land.
d) The claimants and the respondent State have adduced oral
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and documentary evidence in support of their rival contentions.
Learned C.J.S.D. Aurangabad, by its impugned judgment and award
dated 24.4.1996 awarded the compensation at the enhanced rate of
Rs.6/- per sq. ft. for the entire acquired land by treating it as land
meant for non agricultural use, Rs.3,86,867/- towards demolishing
and dismantling charges of electrical, mechanical and machinery
installation, Rs.5,00,000/- for loss of earning for the period from 1981
to 1986, Rs.91,000/- towards damages and dismantling charges and
Rs.15,000/- towards transportation, loading and unloading alongwith
the statutory benefits.
e) Being aggrieved by the same, the respondent State has
preferred first appeal No. 601 of 1997, in this Court and the claimants
have preferred cross objection. The Division Bench of this Court by
judgment and order dated 17.10.2003 in first appeal No. 601 of 1997
partly allowed the appeal. The order of reference court granting
market value of Rs.6/- per sq. ft. for acquired land was quashed and
set aside and the Division Bench of this Court held that the claimants
are entitled to receive the market value for the acquired land as
determined by the S.L.A.O. in his award. The order of the reference
Court awarding an amount of Rs.3,86,867/- to the claimants towards
demolition and dismantling charges in respect of electrical,
mechanical and machinery charges is quashed and set aside. The
Division Bench of this Court further held that the claimants are
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entitled to receive Rs.1,00,000/- for the loss of earning for one year
instead of Rs.5,00,000/-. Further, the order of the reference court
granting Rs.91,000/- towards damages and dismantling charges and
Rs.15,000/- towards transportation was also quashed and set aside.
The appellant State is permitted to recover the excess payment, if
made to the claimant.
f) So far as the cross objection is concerned, it was dismissed for
non removal of objections. The application for restoration of cross
objection was filed on 18.9.2003. The Division Bench of this Court
has observed that the first appeal was heard on merits and on
16.9.2003 and it was reserved for judgment and as such by order
dated 17.10.2003 observed that there is an inordinate delay in filing
restoration application and accordingly rejected the same.
g) Being aggrieved by the said judgment and order passed by the
Division Bench of this court, as detailed above, the claimants have
filed Civil Appeal No. 2432 of 2005 in the Supreme Court. By order
dated 20.4.2011, the Supreme Court, quashed and set aside the
judgment and order passed by the Division Bench of this Court and
remitted the matter to this Court for fresh disposal. Meanwhile, the
claimants have filed review application No. 140 of 2014 in the
aforesaid cross objection and by order dated 31.7.2014, this Court
restored the cross objection on the ground that the appeal is directed
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to be reheard by the Supreme court and as such, the cross objection
will have to be heard alongwith the appeal itself. The cross objection
is restored subject to condition of the claimants to deposit the court
fees.
3. Learned A.G.P. for the appellant State submits that the
S.L.A.O. has awarded just and reasonable compensation in
accordance with law. Learned A.G.P. submits that as on the date of
section 4 notification, the land admeasuring 1 H 44 R out of the
acquired land Gat No. 85 was being used for agricultural purpose.
Though the land admeasuring 80 R out of the acquired land Gat No.
85 converted into N.A. use, it is a part of record that the claimants
have sought permission for use of remaining land admeasuring 1
44 R., as mentioned above, for N.A. use and the authority has
refused to accord the permission. Learned A.G.P. submits that as on
the date of notification, the said Khandsari project was not in
operation and there was no development at all in that area. Thus, on
the date of notification, there was no potential value of acquired land
as non agricultural land. However, the reference court has
considered entire acquired land, as land meant for non agriculture
use. The reference court has committed grave error in determining
the compensation on sq. meter basis for the entire acquired land.
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4. Learned AG.P. submits that no prudent purchaser would come
forward to purchase the large are of land admeasuring 1 H 44 R on
sq. ft. basis. Learned A.G.P. submits that the reference Court has
awarded the compensation at the enhanced rare of Rs.6/- per sq. ft.
for the acquired land, admeasuring 2 H 34 R by converting it into sq.
meter and for that purpose the reference court has relied upon the
sale instance pertains to the small portion of the plots and those plots
are from the villages which are at a distance of 2 to 11 kilometers
from the acquired land. The reference court has committed grave
error by considering the market value of the fully developed plot and
compared the same with undeveloped land. The learned A.G.P.
submits that the said village Mhasekota is small village, having
population of 1000, situated in remote area, without any development
potentials. It is a part of record that the rest of the area admeasuring
1.44 Hectare out of the acquired land Gat No.85 left for cultivation
and S.L.A.O. has therefore, rightly proposed the above stated land to
be valued as agriculture land. The S.L.A.O. has considered the land
admeasuring 0.80 Hectare out of the acquired land Gat No. 85 to be
valued on the basis of sale of open plots from village Mhasekota and
its vicinity, and accordingly awarded just and reasonable
compensation. Learned A.G.P. submits that the valuation of the
structure has been determined on the basis of the valuation made by
the Executive Engineer, Jalgaon medium project.
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5. The learned A.G.P. submits that the said factory was not in
operation and machinery was lying idle. The appellant State has
examined the Land Acquisition Officer as well as Sub Divisional
Engineer, working at Hiwra medium project. The witness Dilip
Gudwe, the Sub Divisional Engineer had visited the site and the
factory premises and submitted a report which is at Exh.54. The
learned A.G.P. submits that the reference court has granted highly
exorbitant market value for the acquired land. The reference Court
has also awarded Rs.5,00,000/- towards loss of earning, without any
basis. The learned A.G.P. submits that the reference court has
granted double benefits to the claimants under the head of same
damages and dismantling. Learned A.G.P. submits that there is no
evidence at all to show that the said Khandsari sugar factory was
running till 1986. There is also no evidence in respect of damages
cause to the machinery.
6. Learned A.G.P. submits that the reference Court has given
more weightage to the evidence of witness No.2 Dharashivkar, who
happened to be the Government approved valuer and his report
Exh.21, compare to oral evidence of S.L.A.O. and the Sub Divisional
Engineer, examined by the State, as its witnesses to substantiate its
contentions. The reference court has also not considered the
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admission given by said witness Dharashivkar in respect of stop
production of said factory in the year 1978-79 i.e. prior to section 4
notification published for the acquired land. Learned A.G.P. submits
that the judgment and award passed by the reference Court is thus
liable to be quashed and set aside and the L.A.R. No. 229 of 1994
may be dismissed and as also cross objection.
7. Learned A.G.P. in order to substantiate his contentions, placed
reliance on the following judgments:-
i) Shaikh Rasheed Shaikh Latif (dead) through L.Rs. vs. State
of Maharashtra and others, reported in 2004 (3) All MR 183,
ii) State of Maharashtra and others vs. Digamber
Bhimashankar Tandale and others, reported in (1996) 2
SCC 583
iii) Ranvir Singh and Anr. vs. Union of India (UOI), reported in
AIR 2005 SC 3467
8. Learned counsel for the claimants submits that at the time of
issuance of notification under Section 4 of the Land Acquisition Act,
1894, no sale transaction had taken place in village Mhasekota. The
land was acquired for Hiwra medium project and the villages
Mhasekota and Dongargaon were to be rehabilitated. Thus, the sale
instance of village Mauje Gondegaon was placed on record.
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Learned counsel submits that in order to establish the sugar factory,
the claimants had purchased the land bearing survey No.35/2, (new
Gat No. 85) admeasuring 2 H 44 R, out of which 16 R land was
potkharaba. The entire project report of factory was prepared by
witness Mukund Dharashivkar of Dhule, who happened to be
Architect. Original project report was placed on record at Exh.42.
The claimants got permission and no objection certificate from
Tahsildar, Soygaon for N.A. use in respect of two acres of land out of
the said land. Accordingly, the factory was installed on 2 acres of
land. The said land was acquired for Hiwra medium project. Likewise,
the lands situated at villages Khadak Deora (kd), Khadak Deora (Bk),
Dongargaon, Mhasekota, Gondegaon, Nimbhore, respectively were
acquired by the government. The claimants had claimed
compensation at the enhanced rate of Rs.150/- per sq. meter and in
order to substantiate the said claim, the claimants have relied upon
the sale instance of village Gondegaon. The said sale deed is at
Exh.23. As per the consideration shown in the said sale deed, rate
comes to Rs.100/- per sq. meters for the open plot. The said sale
deed Exh.23 is dated 3.6.1976 which is six years prior to issuance of
section 4 notification in respect of acquired land. Furthermore, the
claimants have also placed on record the certified copy of the sale
deed of open plot dated 3.9.1982 marked at Exh.35. A plot
admeasuring 5000 sq. ft. was sold for consideration of Rs.35,000/-
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situated at Jargaon, which is at a distance of two kilometers from
village Mhasekota and it is only intervened by river Hiwra. Learned
counsel submits that the claimants had filed an application for grant
of N.A. permission with the revenue authorities regarding remaining
land, however, they were not communicated any decision. The
remaining land was used for parking of the vehicles and keeping the
raw material. Village Pachora is at a distance of 11 kilometers from
the acquired land and the villages Gondegaon, Khadakdeora,
Mhasekota, having their business connections with village Pachora.
There is State Highway going to Sillod and Aurangabad. The
claimants had therefore, rightly claimed the compensation at
Rs.150/- per sq. meter for entire acquired land. However, the
reference court has awarded very meager amount for the acquired
land. Reference Court has not considered above aspects and
awarded the cost of land at the rate of Rs.6/- per sq. ft. only.
9. Learned counsel for the claimants submits that the original
map of factory is placed on record and the same is marked at
Exh.26. Likewise, the map of installation of factory is also placed on
record at Exh.27 which bears the signature of witness Architect
Mukund Dharashivkar. Learned counsel submits that production
capacity of sugar factory was 100 MT per day when the factory was
started functioning initially. The claimants have also got audited the
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accounts of the sugar factory in respect of expenses incurred for
establishing the factory, installation of machinery etc.. The details in
the form of balance sheets placed on record signed by the Chartered
accountant and the same are marked Exh.33 and 34, respectively.
10. Learned counsel for the claimants submits that the work of
Hiwra medium project was started in the year 1981 and due to
construction work undertaken for the project, the work of the factory
was paralyzed due to digging and/or excavation and as such roads
from all sides were blocked. Even the claimants were not allowed to
remove the entire machinery installed in the factory as the State
authority wanted to evaluate entire machinery. Entire machinery has
therefore, gone rusted after its removal from the spot of the factory.
Likewise, the electrical goods, such as electrical instruments, cables,
transformers, switch boards etc., also got damaged and become
valueless. The claimants had sustained huge loss due to dismantling.
The claimants had carried out the valuation of civil work by land and
building method by applying the suitable depreciation through the
government approved valuer's services of Shri Dharashivkar. On the
other hand, the State had not undertaken such exercise and on the
contrary relied upon the report submitted by Mr. Dharashivkar Exh.21
to estimate the loss sustained by the claimants with regard to civil
work, machinery, electrification etc. learned counsel submits that
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however, reference court has awarded meager amount under the
head of civil work. Learned counsel submits that entire machinery
became scrapped and electrical installation become valueless. The
claimants are entitled for substantial amount of civil work, loss of
foundation, towards plants and machinery and also loss of
electrification. Though the reference curt has considered report
Exh.21 and given weightage to the evidence of witness Shri
Dharashivkar, has awarded very meager amount of compensation for
all these losses.
11. Learned counsel for the claimants submits that there were as
many as 250 employees in the factory on contract basis seasonally.
Learned counsel submits that due to acquisition of the land by the
State, the claimants who are partners lost their business. Initially, the
production of the factory was started in the year 1976 and due to
notification issued by the Government the year 1981, and since the
Government started operation through the contractors, the approach
roads were closed and it had become impossible for the claimants to
run the factory. The claimants used to earn Rs.2,00,000/- per annum.
The operation of the said factory could have been continued up to 40
to 50 years had it not been closed. The said amount of Rs.2,00,000/-
p.a. was the net income by deducting all expenditure. However, the
reference Court has awarded Rs.5,00,000/- by considering the period
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of five years on account of severance of business. The claimants are
entitled for the loss of business at the rate of Rs.5,00,000/- per year
from the date of possession till the date of award. Learned counsel
submits that even the State is liable to pay the erection charges of
new industry, however, the reference court has ignored the same
and has not awarded any amount of compensation under this head.
Even the reference court has not awarded compensation for staff
quarter, shade of the sugar factory, godown, sugar platform, boiling
pan, Bhattis, molasses tank, weigh bridge, crusher towers,
crystallizers etc.
12. Learned counsel for the claimants, in order to substantiate his
contentions, placed reliance on the following cases:-
i) Atma Singh (Died) through L.Rs. and Ors. vs. State of
Haryana and another, reported in AIR 2008 SC 709,
ii) Thakarsibhai Devjibhai and others, vs. Executive Engineer,
Gujarat and another, reported in AIR 2001 SC 2424,
iii) Viluben Jhalejar Contractor (D) by L.Rs. vs. State of
Gujarat, reported in AIR 2005 SC 2214
iv) Subh Ram and others vs. Haryana State and Anr, reported
in ARI 2010 SC (Supp) 241,
v) Sabhia Mohammed Yusuf Abdul Hamid Mulla (D) by L.Rs.
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and ors. vs. Special Land Acquisition Officer and others,
reproted in 2013 LAC 626 (SC),
vi) Trambak Balaji Sangale and Ors. vs. The State of
Maharashtra and Anr. reported in 2013 LAC 258 (Bom)
13. I have gone through the pleadings, evidence and the impugned
judgment and award passed by the Reference court. The land Gat
No. 85, admeasuring 2.40 Hectare corresponds to 6 acres, situated
at village Mhasekota, Tq. Soygaon, District Aurangabad came to be
acquired by the State for Hiwra medium project. Notification under
section 4 for acquisition of the land was published in the year 1982.
It appears from the record that out of total acquired land, the
claimants had used 0.80 Hectare in the year 1976 for establishing
Khandsari sugar factory. It is also not disputed that due to
acquisition of the said land, the claimants had to close the said sugar
factory.
14. So far as the cost of land is concerned, the S.L.A.O. has
awarded compensation at the rate of Rs.2/-per sq. meter i.e.
Rs.20,000/- per hectare for 0.80 hectare of land on which Khandsari
sugar factory was established. It is not out of place to mention here
that the claimants had obtained non agriculture (N.A.) permission
from the authority concern for the aforesaid land admeasuring 0.80
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Hectare out of land Gat No. 85, to establish the said sugar factory.
The S.L.A.O. has awarded compensation at the rate of Rs.9500/- per
hectare for the acquired land admeasuring 1 H 44 R by treating the
said land as an agricultural land and awarded Rs.200/- per hectare
for potkharaba land admeasuring 0.16 R.
15. The learned Judge of the reference Court has considered that
the entire acquired land, was being used by the claimants for the
purpose of production of sugar and its allied purposes. The
reference court has held that entire acquired land was utilized for non
agriculture purposes. Consequently, the reference court has
converted the entire acquired land admeasuring 2 H 40 R into sq. ft.
and by deducting 10% of the land towards development cost,
awarded compensation at the rate of Rs.6/- per sq. ft as a cost of
land.
16. One of the claimant Yadavrao Daulatrao Patil, has examined
himself on behalf of the claimants. He has deposed that said
Khandsari sugar factory was situated at Mhasekota Tq. Soygaon,
District Aurangabad. He himself and two others have registered a
partnership firm Exh.19 and in order to establish the said sugar
factory, purchased the land bearing survey No.35/2 (Gat No. 85)
admeasuring about 2 H 40 R. He had also obtained non agriculture
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(N.A.) permission from concerned authority as per letter of
permission placed on record at Exh.22. He has further made it clear
that said N.A. permission of the land was granted only in respect of
two acres of land out of the aforesaid land and accordingly factory
was established/installed on the said 2 acres of land. According to
him, he has submitted an application for grant of N.A. permission
with the concerned authority in respect of remaining land. However,
the concerned authority has not communicated any decision. He has
further deposed that remaining 4 acres of land was used for parking
of the vehicles, keeping stock and raw material. The claimants have
claimed compensation at the enhanced rate of Rs.150/- per sq.
meters as a cost of land, besides the compensation under other
heads. However, the claimants have not adduced satisfactory
evidence to substantiate their claim at the rate of Rs.150/- per sq.
meters as a cost of land.
17. The claimants have placed their reliance on the sale instance
dated 3.6.1976 Exh.23. The said sale deed Exh.23 is of open plot
admeasuring 30x32 ft. The plot under sale deed Exh.23 was sold for
consideration of Rs.3000/- i.e. at the rate of Rs.3.12 per sq. ft. The
claimants have further placed their reliance on sale deed dated
3.2.1982 Exh.35 wherein plot admeasuring 5023 sq. ft. was sold for
Rs.35000/- i.e. Rs.6.9 per sq. ft. It is not disputed that both these
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plots are situated at different villages, far away from the acquired
land. The reference court has considered the sale instance Exh.23 of
the year 1976 and by giving 10% increase every years, worked out
the rate of Rs.6/- per sq. ft. for entire acquired land. It has been
further explained that at time of issuance of notification under Section
4 of Land Acquisition Act, no sale transaction had taken place at
village Mhasekota.
18. The question therefore, arises whether the reference court is
justified in treating entire acquired land as non agriculture land. The
S.L.A.O. has considered the rest of the area admeasuring 1 H 44 R
as an area having no N.A. potentiality and as such, proposed to be
valued as an agricultural land. As per the copy of project report at
Exh.42, scheme of the factory was approved by the Small Scale
Industries, Aurangabad. In the production flow sheets, detail
procedure of production of sugar from sugarcane is mentioned. The
main raw material requires for the sugar factory is sugarcane which
according to the project report, is available in the vicinity of village
Mhasekota. Besides the above production flow sheet, certain part of
the land would also be utilized for office building, workshop, staff
quarters etc. It is also needless to say that the part of the land would
also be utilized for parking, non manufacturing activities and also for
various other purposes. The State has also not adduced any
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evidence to the effect that the land admeasuring 1 H 44 R out of the
acquired land was used mainly for agriculture purpose and not for the
non agriculture purpose.
19. In the case of Shaikh Rasheed Shaikh Latif (dead) through
L.Rs. vs. State of Maharashtra (supra) relied upon by learned
A.G.P. the Division Bench of this court held that the non agriculture
permission cannot be the sole basis to treat the entire land as non
agriculture land or being used for commercial purposes. In para 12 of
the judgment, the Division Bench of this Court has made the
following observations:-
"12. Now coming to the main issue of market value of the subject
land and the status of the said land as non-agricultural or
agricultural, we have documents at Exhibits 41, 42 and 43. The
non-agriculture permission at Exhibit 41 cannot be the sole basis to
treat the entire land as non-agricultural or being used for commercial
purposes. The non-agricultural permission was based on certain
conditions and one of the conditions was that the grantee shall
commence the N.A. use of the land within the period of one year
from the date of this order unless the period is extended from time
to time failing which the permission shall be deemed to have been
cancelled. The construction of the hotel for which compensation has
been granted is located on an area of 2400 sq. ft. and this by itself
would not make the entire remaining land as non-agricultural or
used for commercial purposes. We may in this regard usefully refer
to the case of Smt. Kamlabai Jageshwar Joshi and others vs.
State of Maharashtra and others (AIR 1996 SC 981). Same is the
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view taken in the case of the State of Maharashtra and others vs.
Digamber Bhimashankar Tandale and others (1996) (2) SCC
583."
20. In the case of State of Maharashtra and others vs. Digambar
Bhimashankar Tandale, (supra) relied upon by learned A.G.P., the
Apex Court has observed that there was development on the subject
land on the date when Section 4 notification was issued and even
within a distance of 3 to 4 kilometers, there was no development
except some illegal construction made on the adjoining land. Under
those circumstances, the Apex Court held that as on the date of
Section 4 notification, there was no potential value of the lands
though converted into non agriculture land.
21. In the instant case, however, the acquired land was not used
for any agriculture purpose. The claimant Yadavrao Patil has
deposed that close to his Khandsari sugar factory, there was State
Highway going to Sillod and Aurangabad and nearer Railway Station
for village Mhasekota is Pachora, which is at a distance of 11
kilometers. It also appears from map at Exh. 26 and 27, prepared in
respect of aforesaid Khandsari sugar factory and its location and also
from project report Exh.42, that site of said Khandsari sugar factory is
situated between two rivers viz. river Hiwra and river Nimbhora and
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within a short distance of Jalgaon - Aurangabad highway via
Pachora. I do not think that N.A. permission granted for two acres of
land on which said Khandsari sugar factory was established, is the
sole basis to treat entire land as non-agriculture land. There was
potential value for the entire acquired land as non-agriculture land.
Thus the learned Judge of the reference court has rightly considered
entire acquired land as non agriculture land.
22. In the case of Chandrashekhar (D) by L.Rs. And others vs.
Land Acquisition Officer and another, reported in 2012 AIR (SC)
446, the Apex Court has considered the determination of quantum of
deductions to be applied to the market value assessed on the basis
of exemplar sale transaction. The Supreme Court in para 15 of the
judgment has made the following observations:-
"15. The present controversy calls for our determination on the
quantum of the deductions to be applied, to the market value
assessed on the basis of the exemplar sale transaction, so as to
ascertain the fair compensation payable to the land loser. The
only factual parameters to be kept in mind are, the factual
inferences drawn in the foregoing paragraph. On the issue in
hand, we shall endeavor to draw our conclusions from past
precedent. In the process of consideration hereinafter, we have
referred to all the judgments relied upon by the learned counsel
for the appellants, as well as, some recent judgments on the
issue concerned:
(i) In Brigadier Sahib Singh Kalha & Ors. v. Amritsar Improvement
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Trust & Ors., (1982) 1 SCC 419, this Court opined, that where a
large area of undeveloped land is acquired, provision has to be
made for providing minimum amenities of town-life. Accordingly it
was held, that a deduction of 20 percent of the total acquired land
should be made for land over which infrastructure has to be
raised (space for roads etc.). Apart from the aforesaid, it was also
held, that the cost of raising infrastructure itself (like roads,
electricity, water, underground drainage, etc.) need also to be
taken into consideration. To cover the cost component, for raising
infrastructure, the Court held, that the deduction to be applied
would range between 20 percent to 33 percent. Commutatively
viewed, it was held, that deductions would range between 40 and
53 percent.
(ii) Noticing the determination rendered by this Court in Brigadier
Sahib Singh Kalha's case (supra), this Court in Administrator
General of West Bengal vs. Collector, Varanasi, (1988) 2 SCC
150, upheld deduction of 40 percent (from the acquired land) as
had been applied by the High Court.
(iii) In Chimanlal Hargovinddas vs. Special Land Acquisition
Officer, Poona & Anr., (1988) 3 SCC 751, while referring to the
factors which ought to be taken into consideration while
determining the market value of acquired land, it was observed,
that a smaller plot was within the reach of many, whereas for a
larger block of land there was implicit disadvantages. As a matter
of illustration it was mentioned, that a large block of land would
first have to be developed by preparing its lay out plan.
Thereafter, it would require carving out roads, leaving open
spaces, plotting out smaller plots, waiting for purchasers (during
which the invested money would remain blocked). Likewise, it
was pointed out, that there would be other known hazards of an
entrepreneur. Based on the aforesaid likely disadvantages it was
held, that these factors could be discounted by making
deductions by way of allowance at an appropriate rate, ranging
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from 20 percent to 50 percent. These deductions, according to
the Court, would account for land required to be set apart for
developmental activities. It was also sought to be clarified, that
the applied deduction would depend on, whether the acquired
land was rural or urban, whether building activity was picking up
or was stagnant, whether the waiting period during which the
capital would remain locked would be short or long; and other like
entrepreneurial hazards.
(iv) In Land Acquisition Officer Revenue Divisional Officer,
Chottor vs. L. Kamalamma (Smt.) Dead by LRs. & Ors., (1998) 2
SCC 385, this Court arrived at the conclusion, that a deduction of
40 percent as developmental cost from the market value
determined by the Reference Court would be just and proper for
ascertaining the compensation payable to the landowner.
(v) In Kasturi and others vs. State of Haryana, (2003) 1 SCC
354, this court opined, that in respect of agricultural land or
undeveloped land which has potential value for housing or
commercial purposes, normally 1/3rd amount of compensation
should be deducted, depending upon the location, extent of
expenditure involved for development, the area required for roads
and other civic amenities etc. It was also opined, that appropriate
deductions could be made for making plots for residential and
commercial purposes. It was sought to be explained, that the
acquired land may be plain or uneven, the soil of the acquired
land may be soft and hard, the acquired land may have a hillock
or may be low lying or may have deep ditches. Accordingly, it
was pointed out, that expenses involved for development would
vary keeping in mind the facts and circumstances of each case.
In Kasturi's case (supra) it was held, that normal deductions on
account of development would be 1/3rd of the amount of
compensation. It was however clarified that in some cases the
deduction could be more than 1/3rd and in other cases even less
than 1/3rd.
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(vi) Following the decision rendered by this Court in Brigadier
Sahib Singh Kalha's case, this Court in Land Acquisition Officer,
Kammarapally Village, Nizamabad District, A.P. vs. Nookala
Rajamallu & Ors., (2003) 12 SCC 334, applied a deduction of 53
percent, to determine the compensation payable to the
landowners.
(vii) In V. Hanumantha Reddy (Dead) by LRs. vs. Land
Acquisition Officer & Mandal R. Officer, (2003) 12 SCC 642, this
Court examined the propriety of compensation determined as
payable to the land loser by the High Court. The Reference Court
had determined the market value of developed land at Rs.78 per
sq. yard. The Reference Court then applied a deduction of 1/4th
to arrive at Rs.58 per sq. yard as the compensation payable. The
High Court however concluded, that compensation at Rs.30 per
sq. yard would be appropriate (this would mean a deduction of
approximately 37 percent, as against market value of developed
land at Rs.78 per sq. yard). This Court having made a reference
to Kasturi's case (supra) did not find any infirmity in the order
passed by the High Court. In other words, deduction of 37
percent was approved by this Court.
(viii) In para 21 of the judgment in Viluben Jhalejar Contractor
(Dead) by LRs. vs. State of Gujarat, (2005) 4 SCC 789, it was
held that for development, i.e., preparation of lay out plans,
carving out roads, leaving open spaces, plotting out smaller plots,
waiting for purchasers, and on account of other hazards of an
entrepreneur, the deduction could range between 20 percent and
50 percent of the total market price of the exemplar land.
(ix) In Atma Singh (Dead) through LRs & Ors. vs. State of
Haryana and Anr., (2008) 2 SCC 568, this Court after making a
reference to a number of decisions on the point, and after taking
into consideration the fact that the exemplar sale transaction was
of a smaller piece of land concluded, that deductions of 20
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percent onwards, depending on the facts and circumstances of
each case could be made.
(x) In Lal Chand vs. Union of India & Anr., (2009) 15 SCC 769, it
was held that to determine the market value of a large tract of
undeveloped agricultural land (with potential for development),
with reference to sale price of small developed plot(s), deductions
varying between 20 percent to 75 percent of the price of such
developed plot(s) could be made.
(xi) In Subh Ram & Ors. vs. State of Haryana & Anr., (2010) 1
SCC 444, this Court opined, that in cases where the valuation of
a large area of agricultural or undeveloped land was to be
determined on the basis of the sale price of a small developed
plot, standard deductions ought to be 1/3rd towards infrastructure
space (areas to be left out for roads etc.) and 1/3rd towards
infrastructural developmental costs (costs for raising
infrastructure), i.e., in all 2/3rd (or 67 percent).
(xii) In Andhra Pradesh Housing Board vs. K. Manohar Reddy &
Ors., (2010) 12 SCC 707, having examined the existing case law
on the point it was concluded, that deductions on account of
development could vary between 20 percent to 75 percent. In the
peculiar facts of the case a deduction of 1/3rd towards
development charges was made from the awarded amount to
determine the compensation payable.
(xiii) In Special Land Acquisition Officer & Anr. vs. M.K. Rafiq
Sahib, (2011) 7 SCC 714, this Court after having concluded, that
the land which was subject matter of acquisition was not
agricultural land for all practical purposes and no agricultural
activities could be carried out on it, concluded that in order to
determine fair compensation, based on a sale transaction of a
small piece of developed land (though the acquired land was a
large chunk), the deduction made by the High Court at 50
percent, ought to be increased to 60 percent."
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23. In para 16 of the said judgment, the Supreme Court, based
on the precedents on the issue referred to above, has considered
two components. Para 16 is reproduced herein below:-
"16. Based on the precedents on the issue referred to above it
is seen, that as the legal proposition on the point crystallized,
this Court divided the quantum of deductions (to be made from
the market value determined on the basis of the developed
exemplar transaction) on account of development into two
components.
Firstly, space/area which would have to be left out, for providing
indispensable amenities like formation of roads and adjoining
pavements, laying of sewers and rain/flood water drains,
overhead water tanks and water lines, water and effluent
treatment plants, electricity sub-stations, electricity lines and
street lights, telecommunication towers etc. Besides the
aforesaid, land has also to be kept apart for parks, gardens and
playgrounds. Additionally, development includes provision of
civic amenities like educational institutions, dispensaries and
hospitals, police stations, petrol pumps etc. This "first
component", may conveniently be referred to as deductions for
keeping aside area/space for providing developmental
infrastructure.
Secondly, deduction has to be made for the
expenditure/expense which is likely to be incurred in providing
and raising the infrastructure and civic amenities referred to
above, including costs for levelling hillocks and filling up low
lying lands and ditches, plotting out smaller plots and the like.
This "second component" may conveniently be referred to as
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deductions for developmental expenditure/expense."
24. The Apex Court has treated 67% of deduction as upper
Bench mark and further held that the aforesaid two components
under the head of development could put together should not exceed
upper bench mark. The apex Court in the above cited case has also
held that for the remaining deduction, which is in the form of waiting
period for sale of developed plots and or built-up areas etc. the
permissible range would be up to 8% and the same depends upon
the facts and circumstances of each case.
25. In the instant case, the reference court has considered the
sale deed Exh.23 and Exh.35. The plots under those sale instances
are located in village itself and those plots are surrounded by
developed residential locality with all basic facilities, like roads, water,
electricity connections etc. So far as the acquired land is concerned,
the same is situated at some distance of village Mhasekota.
However, the entire acquired land is also having advantage of
access to highway and permanent water source of river from three
sides. It has also come on record that in order to establish said
Khandsari sugar factory, internal roads have been constructed and
facilities, like electricity and permanent water sources are also made
available.
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26. On careful perusal of sale instance Exh.23, I do not find that
very high price has been paid for purchasing the plot under said sale
instance. Though the reference court has rightly considered 10%
rise for every year, but failed to work out the proper deduction. The
reference court has considered the deduction to the extent of 10%
only. Thus, considering entire evidence on record, the deduction of
40% towards development of land, out of the market value
determined on the basis of exemplar sale deed Exh.23, would be just
and proper. Thus, the costs of the land would come to Rs.9,40,896/.
The original claimants have also filed cross objection and claimed the
compensation at the enhanced rate of Rs.150/- per sq. meter.
However, except those two sale instances, Exh.23 and 35
respectively, the claimants have not adduced any other evidence to
substantiate their claim in respect of the cost of land.
27. On the issue of valuation of structure of the factory (civil part),
dismantling and transportation costs of electrical installation so also
the loss in machinery and mechanical installation, the S.L.A.O. has
awarded Rs.3,67,100/- as valuation of structure (civil part),
Rs.1,06,000/- for electrical installation and Rs.1,05,000/- for
mechanical machinery, dismantling and transportation, the total
amounting to Rs.5,78,100/-. The claimants rely upon the valuation
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certificate given by P.W.2 Dharashivkar, marked at Exh.21 whereas
the State relies upon the oral evidence of witness Dilip Vyankatrao
Gudwe, Sub Divisional Engineer and his valuation report Exh.54..
28. On careful perusal of contents of valuation report Exh.21 and
the oral evidence of P.W.2 Mukund Dharashivkar, it appears that
witness P.W.3 Dharavhivkar has considered the valuation of civil
work and foundation under four heads i.e. (i) reproduction costs, (ii)
market value as on today, (iii) dismantling costs & damages and (iv)
transportation costs of good materials. The reproduction costs has
been shown as Rs.9,55,020/- whereas the market value as of today
has been shown at Rs.5,26,575/- and Rs.4,09,565/- has been shown
under the head of dismantling costs and damages and further
Rs.17,325/- has been shown as transportation costs of good
materials. P.W.2 Mukund Dharashivkar, a private valuer, has
deposed that the valuation of civil work is Rs.5,26,575/- and it also
includes valuation of foundation embedded in the earth. P.W.2
Mukund Dharashivkar has considered civil work and foundation with
regard to powerhouse, office and workshop, temple, drying platform,
crystallizer, staff quarter, double storied shed, water storage tank,
U.C.R. masonry compound, borbed wire compound, M.S. structural
gate, Rab storage tank, Gur Rab tanks, Transformer, weigh bridge
cabin and P.T., mechanical crushers, bels, weigh bridge,
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centrifugals, crystallizers, setting tanks, siruber, electric motor, juice
pipe line, water supply pipe line, chambers 16 in numbers, etc.
P.W.2 Mukund Dharavhivkar has considered almost all items with
size, specifications and the number of items.
29. Witness No.3 for State, Sub Divisional Engineer Mr. Dilip
Gudwe has however, carried out the valuation of civil work comprises
with excavation and civil items, amounting to Rs.3,67,100/-.
According to witness Sub Divisional Engineers, Dilip Gudwe, the
valuation in respect of civil work was personally undertaken by him.
He has admitted that he had gone through the report Exh.21
prepared by P.W.2 Mukund Dharashivkar. As per the report
submitted by witness Gudwe Exh.54, he has almost considered the
same civil work items and foundation, except foundation base
machinery. In para 5 of his cross examination, he has admitted that
before giving his report, he had gone through the report given by the
Government approved valuer Mukund Dharashivkar and it was
considered by him. Though he has denied that he has not worked
out the foundation base machinery, explained that valuation in
respect of foundation quoted by item No.12 Exh.54. I do not find
such valuation in respect of the foundation at item No.12 Exh.54.
30. In para 62 of the judgment, the reference court has observed
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as follows:-
"62. The valuation certificate given by PW-2 Mr.
Dharashivkar is placed at Exh-21. Thus, it appears from the
record that as per the project report that was initially prepared
in the year, 1976 the cost of factory installation was given at
Rs. 6,98,677/- and as per the award it has been given Rs.
5,78,100/-. The plaintiff-petitioner has claimed Rs. 91,000/-
towards dismentling costs and damages and Rs. 15000/-
towards transportation and loading and unloading.
Eventhough the costs of Rs. 6,98,677/- was initially claimed in
the project report, the project report is dated 1974-75. Thus,
by the time the award was pronounced, there would have
been depreciation of 10% in the valuation of the machineries.
Thus, the value recorded by the S.L.A.O. Regarding these
machineries to the tune of Rs. 5,78,100/- which has also been
admitted by the executive engineer needs to be accepted as
there was no vital dispute on this point. As a matter of fact,
whatever entire claim made by the petitioner on the basis of
purchase made by him does not sustain in law, the same was
properly assessed by the State as per project report but it
only mentions about the building valuation and damages and
shifting charges, but does not mention about the demliting
and dismentaling charges in respect of electrical mechanical
and machinery installation which come to Rs. 1,29,267/-,
1,25,300/- and 1,32,300/- respectively. Thus, cumulatively,
the petitioner is entitled to get Rs. 3,86,867/-.
31. In the light of the evidence led by the parties, as discussed
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above, and the observations made by the reference court, it appears
that the reference court has not considered the claim under the head
of civil part separately. I do not find any propriety in referring the
project report. So far as the loss in civil work is concerned, instead of
considering the market value as of today, the dismantling costs and
damages in respect of civil work is most significant and the same is
required to be considered. On perusal of report Exh.21, P.W.2
Mukund Dharashivkar has worked out the dismantling costs and
damages of civil work and foundation to the tune of Rs.4,09,565/-
and Rs.17,325/- for transportation costs of good materials. It
appears that witness Sub Divisional Engineer, Dilip Gudwe has not
correctly shown the same in his report Exh.54 compared to the report
prepared by P.W.2 Mukund Dharashivkar, Exh.21. The claimants
are entitled for the said amount of Rs.4,09,565/- and Rs.17,325/- i.e.
total amount of Rs.4,26,890/-.
32. P.W.2 Mukund Dharashivkar has worked out dismantling
costs and damages of electrical installation at Rs.91,000/- and
Rs.15,000/- for transpiration, loading and unloading. There is no
question to consider the market value of electrical installation so also
full replacement value, as detailed in the report Exh.21. Sub
Divisional Engineer, Dilip Gudwe has admitted in his cross
examination that he had only undertaken the valuation of the civil
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work and no valuation in respect of electrical and mechanical items
was done. According to him, he is not an expert in mechanical and
electrical engineering. He has further admitted in his cross
examination that valuation has been shown by him in respect of
electrical and mechanical from report of P.W.2 Mukund
Dharashivkar. The S.L.A.O. has also considered the same valuation
and accordingly awarded the compensation.
33. P.W.2 Mukund Dharashivkar and witness Sub Divisional
Engineer, Dilip Gudwe both had visited the factory in the year 1984.
So far as the machinery and mechanical installation are concerned,
the claimant Yadavrao Patil has deposed that possession of the
acquired land was taken by the Executive Engineer in the year 1981
and the work of Hiwra medium project was also started in the year
1981. Due to construction of the project, the work of factory was
paralyzed due to digging, excavation as well as the roads from sides
were blocked. He has further deposed that he was not allowed to
take entire machinery, as the State authority wanted to evaluate
entire machinery and at no point of time, he was informed by the
State to take back entire machinery till today. Thus, due to lying idle,
entire machinery went rusted. Likewise, the position of electrical
goods, which comprise the electrical instruments, cables,
transformers, switchboard etc., it had become valueless. Witness
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Sub Divisional Engineer Dilip Gudwe has admitted in para 7 of his
cross examination that in case the machines are not operating, they
become useless and got rusted. He has also admitted that he did
not give specific valuation of the machinery lying in the premises of
the factory and no details are given in respect of valuation of
machinery then standing in the premises and so also electrical
equipments.
34. Witness Dilip Gudwe, Sub Divisional Engineer has admitted in
para 6 of his cross examination that some instruments of the factory
or belonging to the factory were lying scattered in the premises when
he had visited the factory. He has stated in his examination in chief
that he had visited the factory in the month of August, 1984. I find
much substance in the evidence of claimant Yadavrao Patil that he
was not allowed to take entire machinery, as the State authority
wanted to evaluate entire machinery and at no point of time, he was
informed by the State to take back entire machinery. He has also
explained that due to lying idle, entire machinery got rusted.
Likewise, the position of electrical goods also. P.W.2 Mukund
Dharashivkar in his report at Exh.21 has worked out the valuation of
machinery, mechanical installation and also electrical installation
under the head of full replacement value, dismantling costs,
damages and transportation. Even witness Sub Divisional Engineer
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Dilip Gudwe has also relied upon the report Exh.21 prepared by said
witness P.W.2 Mukund Dharashivkar so far as the loss caused to the
machinery and electrical installation. Thus, the claimants are entitled
for amount of Rs.2,39,000/- towards depreciated market value of the
electrical installation and also depreciated market value of machinery
and mechanical installation to the tune of Rs.6,62,000/-. Since the
replacement vale of the aforesaid items considered at depreciated
market value, there is no question of granting separately the
transportation, loading, unloading charges, dismantling costs and
damages.
35. As regards the loss in business, the claimants have claimed
the compensation of Rs.2,00,000/- per year as net income for a
period of 40 to 50 years. The reference court has considered the
loss of income due to severance of business to the tune of
Rs.5,00,000/- at the rate of Rs.1,00,000/- per year for a period of five
years. In para 68 of the judgment, the reference court has observed
that no statement of income has been produced on record. The
reference court has also given reference to the balance sheet to the
of the year 1975-76. As per balance sheet Exh. 33, the reference
court in para 69 has observed that factory was running in loss for
initial period of the year 1975-76. However, considering the purpose
behind installation of Khandsari sugar factory, the availability of raw
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material and also labour at cheap rate, the reference court has
considered the loss of Rs.1,00,000/- per year instead of
Rs.2,00,000/- per year. It also appears that the said period of five
years was considered from the date of taking possession and the
compensation paid in the year 1986. I do not find any substance in
the claim under the head of severance of business to the tune of
Rs.2,00,000/- per year for a span of 40 to 50 years. It cannot be
ignored that the Khandsari sugar factory was a small unit comparing
to the Co-operative sugar factories, which are also situated at village
Kasoda and other adjoining villages. I do to find any fault in the
observations made by the learned Judge of the reference court
awarding compensation of Rs.5,00,000/- under the head of loss of
business. I do not find any error in the observations made by the
reference court that the compensation under the head of loss of
business cannot be awarded for indefinite period.
36. In view of above discussion, the break up of compensation
under various heads awardable to the claimants by way of
compensation, which can be broadly categorized as under:-
I) Cost of the land @ Rs.6/- per sq.ft. Rs. 9,40,896.00
(with deduction to the extent of
40% towards development costs
etc.)
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ii) Civil work Rs. 4,26,890.00
iii) Replacement costs of electrical Rs. 2,39,000.00
installation at depreciated market
value
iv) Replacement cost of machinery Rs. 6,62,000.00
and mechanical installation at
depreciated market value
v) Loss of business Rs. 5,00,000.00
-------------------------
Total Rs.27,68,786.00
Less- the amount awarded by S.L.A.O. Rs. 6,07,812.00
==============
Rs.21,60.974.00
(Rupees Twenty one lacs sixty thousand nine hundred seventy
four only).
37. Hence, I proceed to pass the following order:-
ORDER
I. The first appeal as well as cross objection are hereby partly
allowed. No costs.
II. The judgment and award dated 24.4.1996 passed by the
learned Civil Judge, Senior Division, Aurangabad in L.A.R.
No. 229 of 1994 is hereby modified in the following manner:-
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a) The claimants are entitled for additional compensation
of Rs.21,60,974,786/- (Rupees Twenty one lacs sixty
thousand nine hundred seventy four only) and the respondent
-State shall pay the said amount with all statutory benefits as
awarded by the reference court.
b) Award be drawn up as per the above modification.
c) If any amount is paid as per the judgment and award
passed by the reference court, the same shall be the part of
modified award. The amount in excess, if any, shall be
refunded to the State.
III) First appeal as well as the cross objections are disposed of.
IV) All pending civil application/s, is/are also disposed of.
( V. K. JADHAV, J.)
rlj/
